Delhi VAT has struck it Again

[Rahul Jain]

It has now become habitual on the part of businessman doing business in Delhi to adjust to numerous changes in Delhi VAT Act and Rules every year. More than 20 amendments have been effected during this year.

BUT this time the changes have hit it really hard on the people doing business in Delhi.

Recently, vide Delhi Value Added Tax (Third Amendment) Act, 2012, the Delhi government has introduced a rather new but illogical amendments in Section 9 which deals with ‘Tax Credit’.

This provision disallows the proportionate tax credit on the goods which are sold outside Delhi against C Form. For Ex. If a dealer doing business in Delhi have purchased some goods @ 5% VAT and sold this goods outside Delhi @ 2% CST against C Form, then he is not entitled to claim the entire input credit. Rather input credit will be reduced by the prescribed percentage as per Rules 7.

Apart from the monetary loss people have to suffer, it will increase the litigation which in turn will increase the undue harassment by the department. For instance, if a dealer, A, purchases goods both from Delhi and outside Delhi and he sales goods both in Delhi and outside Delhi. Then how the department would relate as to which sale is against which purchase.  Here, the department will make some arbitrary calculation which will, for obvious reason, detrimental to the interest of the dealer.

A clarification as to application of the aforesaid provisions, maintenance of records, submission of report etc is solicited from the department.

Other major amendments:

1. VAT returns can be now be revised within one year from the end of financial year of return.
2. Levy of penalty on transporters carrying goods without proper or genuine documents increased to 40% of the value of goods
3. Online submission of DVAT 51
4. Dealers to apply and obtain the required statutory forms from the department.